Serious iPhone woes!

First of all, Hello all I have been a close follower/reader of these message forums for a long time now, but have only just got round to signing up, mainly because there are so much more knowledgeable ppl on here than me my help would be useless lol.

Anyway, I'm hoping some of you guys could help. I bought an iPhone back in March and unlocked/bypassed activation with ZiPhone which worked a treat, and have been using it since with no problems what so ever. That was until last night, when i decided to upgrade it to 2.1 (NOOO). Anyway, 6hrs of trawling the internet and trying numerous things to fix it, im stuck. Originally it was stuck on the apple logo, then the cable ---> Itunes screen. Now ive reset it to 2.1 and it goes to the homepage with no problems but i get NO SERVICE! Ive even tried activating the phone to get it sorted but thats not working (and if i phone O2 to get the sim card registered they will ask how ive been using the phone for so long on PAYG). So basically what I have is an iPod touch, with no phone signal, on firmware 2.1

Ive tried so many tutorials/programs that i actually feel like jumping out the window. If you guys have ANY form of advice i would greatly appreciate it.

Download WinPwn (if your windows) or PwnageTool (if your OS X), and just follow the on screen instructions of the application.

First, like bargsbeer stated, do a fresh restore through iTunes. Then, run PwnageTool, and it will create the custom Firmware. To apply the firmware, go to iTunes, in your iPhones main page, Hold Shift + Click on Restore (hold Control if on OSX), and browse to the custom firmware you just created.

In some cases, you might get error (6) from iTunes, and that is because your phone is not in DFU mode. Do a googe search on that term if you get into that situation.

Okay, I restored factory settings through iTunes, downloaded and installed WinPwn 2.5 BETA from official site, opened and ran it. Initially it didnt find the ispw, so i dled 2.0.2 from the internet and ran it again. It found it, got to the creating custom ispw part, completed, then at 100% the program closed.

Thx james! Its working fine with my PAYG sim running 2.1, cydia and installer are on and im getting network coverage! Only problem is its asking me to activate it, how do i bypass this? Because i cant get past the emergency --> slide screen until i do Or do i need to put my personal info/credit card details in? Will this mean I will be signing a contract? (which i dont want)